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The United States within the past few months has seen one of its most volatile time

periods since the Cuban Missile Crisis, and arguably the effects of this period stands to
dictate the American economy for the better half of the 21st century. The Trump
administration’s actions and measures politically and economically have had large-
scaled long run impacts on the economy, which will mark on economic history.

At the dawn of 2020, the Trump administration were controversially involved in the
assassination of Iranian Quds Force leader Qasem Suleimani, which is considered a
terrorist organization by many for its sponsoring of non-state insurgent groups like
Hezbollah and Taliban. While this may not have had a large effect on the global
economy, the Foreign policy reported when the assassination occurred, several
economists were worried about oil prices rising as Iran promised vengeance. And it
did deliver. Like the Saudi Aramco attack by Houthi and Iran, oil prices rose drastically
after the attack, and Iran and the US issued mutual embargoes on each other.
Consequently, it was the Iranian economy that was more impacted, due to a sudden
shortage of foreign imports whereas oil prices, which have remained dynamic since
the Gulf Wars and the instability that has rocked the Middle East.

To add fuel to the fire, as the Coronavirus spread from the Chinese province of Wuhan
where it is thought to have originated, the global economy and migration patterns
were in a turmoil. Countries like Italy, Iran, South Korea, and Japan grew rapidly in
cases, reaching figures of 10000+ in a matter of days. In March, the virus was declared
by the WHO to be a pandemic, and Europe and the US were devastated with more
than 100,000 cases that are still augmenting in number. In response to this, the Trump
administration like several of the other affected countries, decided to impose strict
quarantine lockdown procedures. The opportunity cost of saving these lives and
trying to quell the spread of the virus, has gross macroeconomic impacts. In late April,
almost 30 million Americans had filed for unemployment benefits, and the
unemployment rate had reached an all time record high since 1945 at almost 14.6%.
Traditionally, a recession is defined by a contraction of the business cycle for 2 or
more consecutive quarters and though we have just reached the beginning of the 3rd
quarter of 2020, it can be said without a doubt that we are in a recession that has the
potential to become a depression even as lockdowns are extended and resources are
not fully employed, resulting in lower real GDP output. For an economy like the US,
that is widely based on exports in a variety of sectors like the agricultural, energy,
technological and financial sector, this has been a massive hit. Since the 2nd Industrial
Revolution, the idea of working primarily from home has become non-existent, and
the sudden implementation of a pre-1900s policy has resulted in lower output
generated worldwide. Adding to that, the illness has devastated the healthcare sector,
and several healthcare professionals being overworked, the world has slowly realized
the necessity of implementing government spending in healthcare and creation of a
universal healthcare system. The loss of healthcare professionals to the diseases has
already hurt a dwindling skilled healthcare labor market, resuscitating the need for
skilled labor within that division of the labor market. Despite the variety of fiscal
policies used by the Trump administration like the 2 trillion dollar stimulus package
and the monetary policy of the US Federal Reserve's historic decision to cut interest
rates in Central Banks, the desired effect on aggregate demand via the multiplier has
still not been achieved. The recession’s strength has not deteriorated and despite
various demand-side policies being used globally, consumers and household
confidence remains at a low, further prolonging the recessionary gap’s length.

It must be noted that blue collar workers, traditionally unskilled labor and part-time
workers, were most impacted by the lockdown policy. And due to a history of racism,
and a poverty cycle aggravated by redlining, minority groups like African Americans
and Hispanic Americans were amongst the groups that were affected largely
compared to salaried workers with a 401K that includes groups like Asian Americans.
When New York City’s cases rose exponentially, some of the worst affected groups
were the African Americans from the Bronx. This was a trend that was replicated all
throughout the country, as low income African Americans were some of the people
that were disproportionately diagnosed with COVID-19.

Consequently in late May, when George Floyd’s brutal death at the hands of
Minneapolis’ police department for allegedly using a counterfeit bill was highly
publicized, these details regarding the effects of recent times on poverty struck
African American groups were brought up. The recent surge of the #BlackLivesMatter
movement has made it imperative to consider the effects of the recession on all
groups, as certain groups have been historically worse off and are so now. Black
people have the lowest rates of college level literacy, and on an aggregate level, have
some of the lowest literacy rates across the country, largely impacting the chances of
working in the skilled labor force. The poverty cycle, which in this case is largely
derived from both the lack of economic growth and economic development, can’t be
broken as there’s no insertion of increased human capital to developing the poverty
struck household. The poverty cycle’s chain which follows like this: “Low income ->
Low Savings -> Low Investment -> Low Capital (Physical, Human, Natural) -> Low
Productivity of Labour and Land -> Low Growth in Income”, and thus without the
insertion of investment from the government and otherwise, the break the chain, this
cycle is reiterated constantly. Investment in areas like health, education, skilled
education, and such creates a break in the cycle, allowing households to break out of
the cycle. And so, as the BLM Movement continues to raise awareness and provide
investment aid to these low income groups, the pathway for long run economic
development has arisen.

Arguably, in a period of less economic uncertainty, these protests and utilization of


private sector supply-side policies would be desirable in alleviating their economic
situation, however COVID-19 has added a grey screen to the economic security of the
future. In the short run, perhaps the movement may be successful in achieving
political change, but true change would be on a fundamental psychological level by
changing attitudes as well as changing their economic and financial futures. The world
has fallen upon dark times, and even some of the world’s leading economists have no
word on what the economic future looks like. COVID-19 has pressured governments
to push forward into budget deficits that eventually add to the national debt, adding
further economic strains in the future. Thus, the increasing amount of variable factors
in play makes it impossible for individual consumers or even governments to figure
out the next steps.

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